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A downgrade for Kinross; further dividend hikes seen at BCE

These are some of the key analyst actions on Bay Street today.

Canaccord Genuity analyst Steven Butler is turning decidedly less bullish on Kinross Gold Corp., which reported weaker-than-expected earnings Wednesday evening amid the dramatic overhaul of its executive ranks.

Of key concern to Mr. Butler is Kinross's disclosure in the earnings report that it is now considering a smaller, 30,000-tonne-per-day mill at the Tasiast project in Mauritania. It had initially been planned at 60,000 tonnes per day, and the market is bracing for a possible second writedown of the troubled gold deposit Kinross acquired through the $7.1-billion (U.S.) takeover of Red Back Mining two years ago.

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A feasibility study of Tasiast has been delayed and Kinross now plans to complete a pre-feasbility study in the first quarter of next year that will incorporate the possibility of a smaller mill.

Kinross reported adjusted second-quarter earnings per share of 14 cents, which was below the consensus estimate of 17 cents. J. Paul Rollinson took over the role of CEO last week after the miner sacked former top executive Tye Burt. The company announced a further management shuffle today.

Downside: Mr. Butler downgraded Kinross to a "hold" from a "buy" and cut his price target to $8.75 (U.S.) from $10.50. That's below the Street median target of $11.83 (U.S.), according to Thomson/First Call. There are eight strong buy ratings on Kinross, one buy and eight holds, according to Zacks Investment Research.

Also see: Kinross management shuffle continues

Kinross drills into costs as metals prices slip


BCE Inc.
Investors should expect further dividend increases at BCE thanks to its strong operating results and strategy, said Desjardins Securities Inc. analyst Maher Yaghi. The company beat second-quarter earnings expectations this week as it hiked its annual dividend to $2.27, and Mr. Yaghi sees a sustainable dividend growth rate of 5 per cent per year going forward. "Moreover, while we acknowledge that valuations have increased over the past year, we highlight that these increases are justified by a lower cost of capital driven by a persistent lower interest rate environment," he said.

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Upside: Mr. Yaghi raised his target to $47 (Canadian) from $43.20 and reiterated a "buy" rating.

Related: BCE not ready to hang up on home phone business


5N Plus Inc.
5N Plus is contending with a landslide in minor metals prices, reporting second-quarter revenues this week that came up well short of expectations as it took impairment charges, noted CIBC World Markets analyst Ian Tharp. The company's sales backlog has declined, but Mr. Tharp believes that's mostly due to pricing declines rather than shrinking volumes, and sees product demand remaining intact in the near term.

Upside: Mr. Tharp cut his price target to $3.25 from $5.75 and reiterated a "sector outperformer" rating.


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Alliance Grain Traders
Some of Alliance Grain Traders' biggest customers are seeing an easing in credit restrictions that had been restricting their purchases of pulses, and fundamentals in those products are improving thanks to lower plantings and tighter inventories, noted Canaccord Genuity analyst Keith Carpenter. He believes the company's earnings potential will brighten heading into 2013, as it also benefits from cost-cutting measures.

Upside: Mr. Carpenter raised his price target by $1 to $18.50.


Canadian Tire Corp.
It's time for investors to start paying attention to Canadian Tire, urged RBC Dominion Securities analyst Irene Nattel after the retailer beat expectations in reporting second-quarter results. The company saw solid performance across its retail platform and strong management of its credit card portfolio, as same-store sales in its core retail operations rose 0.4 per cent. "CTC may be the stock investors love to ignore, but absolute and relative performance suggest CTC is defying the skeptics and delivering industry-leading performance," she said.

Upside: Ms. Nattel raised her price target by $6 to $91 and reiterated an "outperform" rating.

Read more: Canadian Tire profit climbs 25 per cent

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